November 18th 2014 5:12am GMT, London UK
Today’s Binary Options Trading Strategy:
• Currency Pair: GBPUSD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 1.5660
• Upside Potential: The upside potential for this binary call option is 520 pips to 1.6180
• Downside Potential: The downside potential for this binary call option is 260 pips to 1.5400
The GBPUSD has resumed its sharp move to the downside after reaching an intra-day high of 1.6182 on October 28th 2014. After the release of the inflation report out of the Bank of England which noted that inflation may drift lower and could reach 1.0% the GBPUSD accelerated to the downside and reached an intra-day low of 1.5592 on November 14th 2014. The move lower has formed a bearish price channel which guided this currency pair lower, but has now intersected with its horizontal support level.
Price action temporarily broke down below its bearish price channel from where it was able to bounce higher and break back inside its bearish price channel. The GBPUSD is expected to continue its volatile trade until a successful breakout will take this currency pair back into its horizontal resistance level. Binary options traders can take advantage of the expected move to the upside with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 1.5660 for a risk/reward ratio of 1.0/2.00.
Volatility is expected to spike as price action will trade back inside its bearish price channel from where upward momentum is anticipated to suffice a breakout above its bearish chart formation. Sellers are expected to defend the descending resistance level of its bearish price channel in order to resume the move to the downside. Buyers will try to use the horizontal support level combined with expected favorable economic data as a solid platform in order to extend a move to the upside. This favors binary call options in the GBPUSD currency pair.
The first resistance level, after a successful breakout above the descending resistance level of its bearish price channel, awaits the GBPUSD at its intra-day high of 1.5941 which was reached on November 12th 2014. This level represents the last time the GBPUSD touched its descending resistance level. A breakout above this level will take the GBPUSD to its intra-day low of 1.5994 which was reached on October 23rd 2014. The final resistance level is located at its intra-day high of 1.6182 which was reached on October 28th 2014 and from where a double top formation is possible.
The following economic data out of the United Kingdom is expected to impact the base currency, the British Pound, of the GBPUSD currency pair:
Consumer Price Index for the month of October:
• Expectations: A monthly increase of 0.1%, an annualized increase of 1.2%
• Previous Report’s Data: A monthly reading of 0.0% was reported in September, an annualized increase of 1.2%
• Impact on the British Pound: The expected monthly uptick in consumer inflation out of the United Kingdom may suffice to rally the British Pound which favors binary call options in the GBPUSD currency pair
In addition the following economic report out of the United States is expected to impact the quote currency, the US Dollar, of the GBPUSD currency pair:
Producer Price Index for the month of October:
• Expectations: A monthly contraction of 0.1%, an annualized increase of 1.2%
• Previous Report’s Data: A monthly contraction of 0.1% was reported in September, an annualized increase of 1.6%
• Impact on the US Dollar: The expected monthly deflationary pressures in producer prices are anticipated to pressure the US Dollar to the downside; this favors binary call options in the GBPUSD currency pair